stainless steel butt-weld pipe fittings from italy, malaysia, and the philippines ... · 2018. 1....

U.S. International Trade CommissionPublication 4751 January 2018

Washington, DC 20436

Stainless Steel Butt-Weld Pipe Fittings From Italy, Malaysia, and the Philippines

Investigation Nos. 731-TA-865-867 (Third Review)

U.S. International Trade Commission

COMMISSIONERS

Rhonda K. Schmidtlein, Chairman David S. Johanson, Vice Chairman

Irving A. Williamson Meredith M. Broadbent

Catherine DeFilippo

Staff assigned

Address all communications to Secretary to the Commission

United States International Trade Commission Washington, DC 20436

Director of Operations

Amanda Lawrence, Investigator David Guberman, Industry Analyst

Lauren Gamache, Economist Luke Tillman, Attorney

Mary Messer, Supervisory Investigator

U.S. International Trade CommissionWashington, DC 20436

www.usitc.gov

Publication 4751 January 2018

Stainless Steel Butt-Weld Pipe Fittings From Italy, Malaysia, and the Philippines

Investigation Nos. 731-TA-865-867 (Third Review)

CONTENTS

Page

i

Determinations .................................................................................................................... 1

Views of the Commission ...................................................................................................... 3

Information obtained in these reviews ................................................................................ I-1

Background ................................................................................................................................ I-1

Responses to the Commission’s notice of institution ............................................................... I-1

Individual responses .............................................................................................................. I-1

Party comments on adequacy ............................................................................................... I-2

Recent developments in the industry ....................................................................................... I-3

The original investigations and subsequent reviews ................................................................ I-4

The original investigations ..................................................................................................... I-4

The first five-year reviews ..................................................................................................... I-5

The second five-year reviews ................................................................................................ I-5

Prior related investigations ....................................................................................................... I-6

The product ............................................................................................................................... I-7

Commerce’s scope ................................................................................................................ I-7

Description and uses ............................................................................................................. I-8

Manufacturing process ........................................................................................................ I-10

U.S. tariff treatment ............................................................................................................ I-10

The definition of the domestic like product ........................................................................ I-11

Actions at Commerce .............................................................................................................. I-11

Current five-year reviews .................................................................................................... I-12

The industry in the United States ........................................................................................... I-12

U.S. producers ..................................................................................................................... I-12

Definition of the domestic industry and related party issues ............................................. I-13

U.S. producers’ trade and financial data ............................................................................. I-13

U.S. imports and apparent consumption ................................................................................ I-16

U.S. importers ...................................................................................................................... I-16

U.S. imports ......................................................................................................................... I-16

Apparent U.S. consumption and market shares ................................................................. I-18

CONTENTS

Page

ii

Cumulation considerations ..................................................................................................... I-21

Presence in the market ....................................................................................................... I-21

Geographic markets ............................................................................................................ I-21

Foreign industries .................................................................................................................... I-22

The industry in Italy ............................................................................................................. I-22

The industry in Malaysia ...................................................................................................... I-24

The industry in the Philippines ............................................................................................ I-25

Antidumping or countervailing duty orders in third-country markets ................................... I-27

The global market ................................................................................................................... I-27

Appendixes

A. Federal Register notices ................................................................................................. A-1

B. Company-specific data ................................................................................................... B-1

C. Summary data compiled in prior proceedings ............................................................... C-1

D. Purchaser questionnaire responses ............................................................................... D-1

Note.—Information that would reveal confidential operations of individual concerns may not

be published and therefore has been deleted. Such deletions are indicated by asterisks.

1

UNITED STATES INTERNATIONAL TRADE COMMISSION

Investigation No. 731-TA-865-867 (Third Review) Stainless Steel Butt-Weld Pipe Fittings from Italy, Malaysia, and the Philippines

DETERMINATIONS

On the basis of the record1 developed in the subject five-year reviews, the United States International Trade Commission (“Commission”) determines, pursuant to the Tariff Act of 1930 (“the Act”), that revocation of the antidumping duty orders on stainless steel butt-weld pipe fittings from Italy, Malaysia, and the Philippines would be likely to lead to continuation or recurrence of material injury to an industry in the United States within a reasonably foreseeable time.

BACKGROUND

The Commission, pursuant to section 751(c) of the Act (19 U.S.C. 1675(c)), instituted these reviews on June 1, 2017 (82 F.R. 25324) and determined on September 5, 2017 that it would conduct expedited reviews (82 F.R. 46524, October 5, 2017).

1 The record is defined in sec. 207.2(f) of the Commission’s Rules of Practice and Procedure

(19 CFR 207.2(f)).

3

Views of the Commission

Based on the record in these five-year reviews, we determine under section 751(c) of the Tariff Act of 1930, as amended (“the Tariff Act”), that revocation of the antidumping duty orders on stainless steel butt-weld (“SSBW”) pipe fittings from Italy, Malaysia, and the Philippines would be likely to lead to continuation or recurrence of material injury to an industry in the United States within a reasonably foreseeable time.

I. Background

Original Investigations. The original petitions concerning SSBW pipe fittings from Germany, Italy, Malaysia, and the Philippines were filed on December 29, 1999.1 The Commission determined that an industry in the United States was materially injured by reason of less-than-fair value (“LTFV”) subject imports of SSBW pipe fittings from Italy, Malaysia, and the Philippines, and made a negative determination with respect to LTFV imports from Germany.2 On February 23, 2001, the U.S. Department of Commerce (“Commerce”) issued antidumping duty orders on SSBW pipe fittings from Italy, Malaysia, and the Philippines.3

First Five-Year Reviews: On January 3, 2006, the Commission instituted the first five-year reviews of the antidumping duty orders on SSBW pipe fittings from Italy, Malaysia, and the Philippines.4

In November 2006, following its full first five-year reviews, the Commission determined that revocation of the antidumping duty orders on SSBW pipe fittings from Italy, Malaysia, and the Philippines would be likely to lead to continuation or recurrence of material injury within a reasonably foreseeable time.5 On December 11, 2006, Commerce published its notice of continuation of the antidumping duty orders covering SSBW pipe fittings from Italy, Malaysia, and the Philippines.6

Second Five-Year Reviews: On November 1, 2011, the Commission instituted second five-year reviews of the antidumping duty orders on SSBW pipe fittings from Italy, Malaysia, and the Philippines.7

In June 2012, following its expedited second five-year reviews, the Commission determined that revocation of the antidumping duty orders on SSBW pipe fittings from Italy,

1 65 Fed. Reg. 1174 (Jan. 7, 2000). 2 Certain Stainless Steel Butt-Weld Pipe Fittings from Italy, Malaysia and the Philippines, Inv. Nos.

731-TA-865-867 (Final), USITC Pub. 3387 (Jan. 2001) (“Original Determinations”); Certain Stainless Steel Butt-Weld Pipe Fittings from Germany, Inv. No. 731-TA-864 (Final), USITC Pub. 3372 (Nov. 2000).

3 66 Fed. Reg. 11257 (Feb. 23, 2001). 4 71 Fed. Reg. 140 (Jan. 3, 2006). 5 Stainless Steel Butt-Weld Pipe fittings from Italy, Malaysia, and the Philippines, Inv. Nos. 731-

TA-865-867 (Reviews), USITC Pub. 3889 (Nov. 2006) (“First Reviews”). 6 71 Fed. Reg. 71530 (Dec. 11, 2006). 7 76 Fed. Reg. 67473 (Nov. 1, 2011).

4

Malaysia, and the Philippines would be likely to lead to continuation or recurrence of material injury within a reasonably foreseeable time.8 On July 20, 2012, Commerce published its notice of continuation of the antidumping duty orders covering SSBW pipe fittings from Italy, Malaysia, and the Philippines.9

Current Reviews. On June 1, 2017, the Commission instituted these five-year reviews.10 The Commission received a joint response to the notice of institution from Core Pipe Products, Inc. (“Core Pipe”), Shaw Alloy Piping Products, LLC (“Shaw APP”), and Taylor Forge Stainless, Inc. (“Taylor Forge”) (collectively “domestic producers”), domestic producers of SSBW pipe fittings. It did not receive a response from any respondent interested party. On September 5, 2017, the Commission found the domestic interested party group response to be adequate and the respondent interested party group response to be inadequate, and did not find any other circumstances that would warrant conducting full reviews.11 The Commission therefore determined that it would conduct expedited reviews.12 The domestic producers filed comments pursuant to Commission Rule 207.62(d).13

Data/response coverage. U.S. industry data for these reviews are based on the information the domestic producers provided in response to the notice of institution and information from the original investigations and prior reviews. The domestic producers estimate that they were responsible for *** percent of domestic production of SSBW pipe fittings during 2016.14 No U.S. importer, exporter, or foreign producer of subject merchandise participated in these reviews. U.S. import data are based on official import statistics and information from the original investigations and prior reviews.15 Foreign industry data and related information are based on information from the original investigations, prior reviews, and publicly available data.

II. Domestic Like Product and Domestic Industry

A. Domestic Like Product

In making its determination under section 751(c) of the Tariff Act, the Commission defines the “domestic like product” and the “industry.”16 The Tariff Act defines “domestic like product” as “a product which is like, or in the absence of like, most similar in characteristics and

8 Stainless Steel Butt-Weld Pipe Fittings from Italy, Malaysia, and the Philippines, Inv. Nos. 731-TA-865-867 (Second Reviews) (June 2012) (“Second Reviews”).

9 77 Fed. Reg. 42697 (July 20, 2012). 10

82 Fed. Reg. 25324 (June 1, 2017). 11 Explanation of Commission Determinations on Adequacy (Sept. 8, 2017) (EDIS Doc. 622725). 12 Explanation of Commission Determinations on Adequacy (Sept. 8, 2017) (EDIS Doc. 622725). 13 Domestic Producer Comments (Nov. 15, 2017) (“Comments”). 14 See Domestic Producer Response (“Response”) at 5; Confidential Report (“CR”)/Public Report

(“PR”) INV-PP-116 at Table I-1 (Aug. 23, 2017). 15 CR/PR at Table I-4. 16 19 U.S.C. § 1677(4)(A).

5

uses with, the article subject to an investigation under this subtitle.”17 The Commission’s practice in five-year reviews is to examine the domestic like product definition from the original determinations and consider whether the record indicates any reason to revisit the prior findings.18

Commerce has defined the imported merchandise within the scope of the orders under review as follows:

Certain stainless steel butt-weld pipe fittings (butt-weld fittings). Butt-weld pipe fittings are under 14 inches in outside diameter (based on nominal pipe size), whether finished or unfinished. The product encompasses all grades of stainless steel and “commodity” and “specialty” fittings. Specifically excluded from the definition are threaded, grooved, and bolted fittings, and fittings made from any material other than stainless steel. The butt-weld fittings subject to the orders are generally designated under specification ASTM A403/A403M, the standard specification for Wrought Austenitic Stainless Steel Piping Fittings, or its foreign equivalents (e.g., DIN or JIS specifications). This specification covers two general classes of fittings, WP and CR, of wrought austenitic stainless steel fittings of seamless and welded construction covered by the latest revision of ANSI B16.9, ANSI B16.11, and ANSI B16.28. Butt-weld fittings manufactured to specification ASTM A774, or its foreign equivalents, are also covered by the orders. The orders do not apply to cast fittings. Cast austenitic stainless steel pipe fittings are covered by specifications A351/A351M, A743/743M, and A744/A744M.19

Commerce’s scope has remained the same since the original investigations. SSBW pipe fittings are used to connect pipe sections where conditions require

permanent, welded connections. The beveled edges of SSBW pipe fittings distinguish them from other types of pipe fittings, such as threaded, grooved, or bolted fittings, which rely on different

17 19 U.S.C. § 1677(10); see, e.g., Cleo Inc. v. United States, 501 F.3d 1291, 1299 (Fed. Cir. 2007); NEC Corp. v. Department of Commerce, 36 F. Supp. 2d 380, 383 (Ct. Int’l Trade 1998); Nippon Steel Corp. v. United States, 19 CIT 450, 455 (1995); Timken Co. v. United States, 913 F. Supp. 580, 584 (Ct. Int’l Trade 1996); Torrington Co. v. United States, 747 F. Supp. 744, 748-49 (Ct. Int’l Trade 1990), aff’d, 938 F.2d 1278 (Fed. Cir. 1991); see also S. Rep. No. 249, 96th Cong., 1st Sess. 90-91 (1979).

18 See, e.g., Internal Combustion Industrial Forklift Trucks from Japan, Inv. No. 731-TA-377 (Second Review), USITC Pub. 3831 at 8-9 (Dec. 2005); Crawfish Tail Meat from China, Inv. No. 731-TA-752 (Review), USITC Pub. 3614 at 4 (July 2003); Steel Concrete Reinforcing Bar from Turkey, Inv. No. 731-TA-745 (Review), USITC Pub. 3577 at 4 (Feb. 2003).

19 82 Fed. Reg. 46763 (Oct. 6, 2017).

6

fastening methods. When placed against the matching beveled end of a pipe or another fitting, the beveled edges of SSBW pipe fittings form a shallow channel that accommodates the “bead” of the weld that fastens the two adjoining pieces. SSBW pipe fittings are identified by their diameter, wall thickness, shape or configuration, and material composition. Only those SSBW pipe fittings of wrought stainless steel which are less than 14 inches in outside diameter are covered by the antidumping duty orders under review.20 SSBW pipe fittings within the scope definition are available in several basic shapes, such as elbows, returns, tees, crosses, reducers, caps, and stub-ends.21

In general, SSBW pipe fittings are used by a variety of industries in “process” operations (piping systems) to join pipes in straight lines or to change the direction or flow of fluids. SSBW pipe fittings are typically used in bitumen upgraders, heavy oil refineries, offshore oil and gas production platforms, nuclear power plants, and some acid and chemical plants. SSBW pipe fittings classified under the American Society for Testing and Materials (“ASTM”) A403/A403M specification are used in high pressure and/or high heat piping applications, while those classified under ASTM A774/A774M-14 are general use corrosive-resistant SSBW pipe fittings that are not tested or manufactured for use in high heat or full pressure environments.22

Original Investigations and Prior Reviews. In the original investigations and prior reviews, the Commission found a single domestic like product coextensive with the scope definition.23 In the original investigations, the respondent argued that the Commission should include large-diameter butt-weld fittings in the domestic like product, but the Commission declined to do so.24 In the prior reviews, no party argued for a definition of the domestic like product that differed from the definition that the Commission adopted in the original investigations.25

Current Reviews. In these current five-year reviews, the domestic producers state that they agree with the Commission’s definition of domestic like product in the prior proceedings.26 Additionally, the record of these expedited third five-year reviews does not contain information that calls into question the Commission’s domestic like product definition in the original investigations and prior five-year reviews.27 Therefore, we define a single domestic like product as consisting of all SSBW pipe fittings, coextensive with the scope definition.

20 CR at I-11; PR at I-8. 21

CR at I-12; PR at I-9. 22 CR at I-12-13; PR at I-9. 23 Original Determinations, USITC Pub. 3372 at 5-7; First Reviews, USITC Pub. 3889 at 5; Second

Reviews, USITC Pub. 4337 at 5. 24 Original Determinations, USITC Pub. 3372 at 7. 25 First Reviews, USITC Pub. 3889 at 5; Second Reviews, USITC Pub. 4337 at 5. 26 Response at 18. 27 See generally CR at I-11-14; PR at I-8-10.

7

B. Domestic Industry

Section 771(4)(A) of the Tariff Act defines the relevant industry as the domestic “producers as a whole of a domestic like product, or those producers whose collective output of a domestic like product constitutes a major proportion of the total domestic production of the product.”28 In defining the domestic industry, the Commission’s general practice has been to include in the industry producers of all domestic production of the like product, whether toll-produced, captively consumed, or sold in the domestic merchant market.

Original Investigations and Prior Reviews. In the original investigations, the Commission defined the domestic industry as all domestic producers of finished and unfinished SSBW pipe fittings having an outside diameter (based on nominal pipe size) of less than 14 inches except ***, which it excluded as a related party.29 In each prior review, the Commission defined the domestic industry to include all producers of the domestic like product.30 In the prior reviews, the Commission found that there were not appropriate circumstances warranting the exclusion of a related party producer from the domestic industry.31

Current Reviews. The domestic producers agree with the Commission’s definition of the domestic industry in the original investigations.32 There are no related party or other domestic industry issues in these five-year reviews.33 Consequently, we define the domestic industry as consisting of all domestic producers of finished and unfinished butt-weld fittings having an outside diameter (based on nominal pipe size) of less than 14 inches.

III. Cumulation

A. Legal Standard

With respect to five-year reviews, section 752(a) of the Tariff Act provides as follows:

28 19 U.S.C. § 1677(4)(A). The definitions in 19 U.S.C. § 1677 apply to the entire subtitle containing the antidumping and countervailing duty laws, including 19 U.S.C. §§ 1675 and 1675a. See 19 U.S.C. § 1677.

29 Original Determinations, USITC Pub. 3372 at 7. 30 First Reviews, USITC Pub. 3889 at 6; Second Reviews, USITC Pub. 4337 at 7. 31 First Reviews, USITC Pub. 3889 at 6; Second Reviews, USITC Pub. 4337 at 7. In each of the

prior proceedings the Commission, considered whether to exclude ***. It found that *** satisfied the definition of a related party as an importer of subject merchandise from ***. It further found that *** volume of domestic production was *** larger than its volume of subject imports, indicating that its primary interest was in domestic production. First Reviews, USITC Pub. 3889 at 6; Second Reviews, USITC Pub. 4337 at 7; Confidential First Reviews Determination (EDIS Doc. 619063) at 6; Confidential Second Reviews Determination (EDIS Doc. 619083) at 6-7.

32 See Response at 18. 33 CR at I-19; PR at I-13.

8

the Commission may cumulatively assess the volume and effect of imports of the subject merchandise from all countries with respect to which reviews under section 1675(b) or (c) of this title were initiated on the same day, if such imports would be likely to compete with each other and with domestic like products in the United States market. The Commission shall not cumulatively assess the volume and effects of imports of the subject merchandise in a case in which it determines that such imports are likely to have no discernible adverse impact on the domestic industry.34 Cumulation therefore is discretionary in five-year reviews, unlike original investigations,

which are governed by section 771(7)(G)(i) of the Tariff Act.35 The Commission may exercise its discretion to cumulate, however, only if the reviews are initiated on the same day, the Commission determines that the subject imports are likely to compete with each other and the domestic like product in the U.S. market, and imports from each such subject country are not likely to have no discernible adverse impact on the domestic industry in the event of revocation. Our focus in five-year reviews is not only on present conditions of competition, but also on likely conditions of competition in the reasonably foreseeable future.

1. The Original Investigations

In the original investigations, the Commission cumulated subject imports from Italy, Malaysia, and the Philippines.36 It found geographic overlap, simultaneous presence, similar channels of distribution, and at least moderate fungibility among the subject imports from the three countries and between the subject imports and the domestic like product. 37

2. The Prior Five-Year Reviews

In both prior five-year reviews, the Commission exercised its discretion to cumulate subject imports from Italy, Malaysia, and the Philippines. In the first five-year reviews, the Commission did not find that revocation of any of the individual orders would likely have no

34 19 U.S.C. § 1675a(a)(7). 35 19 U.S.C. § 1677(7)(G)(i); see also, e.g., Nucor Corp. v. United States, 601 F.3d 1291, 1293

(Fed. Cir. 2010) (Commission may reasonably consider likely differing conditions of competition in deciding whether to cumulate subject imports in five-year reviews); Allegheny Ludlum Corp. v. United States, 475 F. Supp. 2d 1370, 1378 (Ct. Int’l Trade 2006) (recognizing the wide latitude the Commission has in selecting the types of factors it considers relevant in deciding whether to exercise discretion to cumulate subject imports in five-year reviews); Nucor Corp. v. United States, 569 F. Supp. 2d 1328, 1337-38 (Ct. Int’l Trade 2008).

36 The Commission did not cumulate subject imports from Germany because those imports, for purposes of determining present material injury, were not eligible for cumulation under the statute.

37 USITC Pub. 3387 at 9.

9

discernible adverse impact on the domestic industry.38 Relying on virtually the same information as the original investigations, it further found that there was likely to be a reasonable overlap of competition if the orders were revoked. Specifically, in the first five-year reviews, the Commission explained that shipments of the domestic like product and subject imports from all three countries overlapped to a significant extent with regard to input material, size, and end use. With respect to geographic overlap, the Commission found that imports from each subject country entered through many of the same ports, and were sold nationwide primarily through distributors and sometimes to end users, as was the domestic like product. Further, subject imports from Italy, Malaysia, and the Philippines and the domestic like product were generally present in the U.S. market throughout the period of review.39 The Commission further found no evidence of different likely conditions of competition with respect to imports from any of the subject countries.40

In the second five-year reviews, the Commission reaffirmed its findings from the first five-year reviews concerning no discernible adverse impact.41 It further explained that the record did not suggest that the domestic like product and subject imports from all three countries were any less fungible than they had been during the first five-year reviews. Similarly, with respect to geographic overlap, the Commission found no information to contradict its finding in the first five-year reviews that U.S. producers and importers both sold nationwide. With respect to the other factors, the Commission found that subject imports from each country and the domestic like product were sold throughout the United States and through the same channels of distribution and that subject imports from each of the three countries were simultaneously present throughout the period of review.42 The Commission again found that there was no indication of significant differences in likely conditions of competition with respect to subject imports from Italy, Malaysia, and the Philippines.43

B. Arguments of the Parties

The domestic producers argue that the Commission should cumulate subject imports from Italy, Malaysia, and the Philippines. They contend that subject imports from all three countries have maintained a presence in the U.S. market and the industries in each of the three subject countries are export oriented.44

38 First Reviews, USITC Pub. 3889 at 8. 39 First Reviews, USITC Pub. 3889 at 7-8. 40 First Reviews, USITC Pub. 3889 at 9 n.46. 41 Second Reviews, USITC Pub. 4337 at 8-9. 42 Second Reviews, USITC Pub. 4337 at 10-11. 43 Second Reviews, USITC Pub. 4337 at 11. 44 Comments at 6-7.

10

C. Analysis

In these reviews, the statutory threshold for cumulation is satisfied as all reviews were initiated on the same day: June 1, 2017.45 In addition, we consider the following issues in deciding whether to exercise our discretion to cumulate the subject imports: (1) whether imports from either of the subject countries are precluded from cumulation because they are likely to have no discernible adverse impact on the domestic industry; (2) whether there is a likelihood of a reasonable overlap of competition among the subject imports and the domestic like product; and (3) whether subject imports are likely to compete in the U.S. market under different conditions of competition.

1. Likelihood of No Discernible Adverse Impact

Neither the statute nor the Uruguay Round Agreements Act Statement of Administrative Action (“URAA SAA”) provides specific guidance on what factors the Commission is to consider in determining that imports “are likely to have no discernible adverse impact” on the domestic industry.46 With respect to this provision, the Commission generally considers the likely volume of subject imports and the likely impact of those imports on the domestic industry within a reasonably foreseeable time if the orders are revoked. Our analysis for each of the subject countries takes into account, among other things, the nature of the product and the behavior of subject imports in the original investigations.

Italy. Subject imports from Italy have maintained a presence in the U.S. market from the original investigations up to the current period of review. In the original investigations, the volume of subject imports from Italy declined from *** pounds in 1997 to *** pounds in 1998, and then increased to *** pounds in 1999.47 The market share of subject imports from Italy was *** percent in 1997, *** percent in 1998, and *** percent in 1999.48

Subject imports from Italy peaked at 2.0 million pounds in 2000. After the imposition of the order, the volume of subject imports from Italy declined to 822,000 pounds in 2001.49 Subject imports from Italy continued to decline and were 575,000 pounds in 2002, 177,000 pounds in 2003, and 138,000 pounds in 2004, before increasing to 192,000 pounds in 2005.50 The market share of subject imports from Italy declined from *** percent in 2000 to 1.1 percent in 2005.51

45 81 Fed. Reg. 75851 (Nov. 1, 2016). 46

URAA SAA, H.R. Rep. No. 103-316, vol. I at 887 (1994). 47 Confidential Staff Report Original Investigations (“Original Investigations CR”) INV-X-235 at

Table IV-5 (EDIS Doc. 617162) (Nov. 6, 2000). 48 Original Investigations CR at Table IV-6. 49 Confidential Staff Report First Reviews (“First Reviews CR”) INV-DD-144 at Table IV-1 (EDIS

Doc. 618832) (Oct. 11, 2006). 50 First Reviews CR at Table I-1. 51 First Reviews CR at Table I-9.

11

During the second period of review, imports of subject merchandise from Italy ranged from a period high of 398,000 pounds in 2007 to a period low of 99,000 pounds in 2008.52 Subject imports from Italy were 132,000 pounds in 2010.53 In 2010, the only year for which market share data were available, subject imports from Italy had a *** percent share of the quantity of apparent U.S. consumption.54

During the current period of review, subject import volume from Italy ranged from a period low of 91,000 pounds in 2011 to a period high of 786,000 pounds in 2014.55 In 2016, subject import volume from Italy was 149,000 pounds and the market penetration of these imports was *** percent.56

The domestic producers identified 15 current producers or exporters of subject merchandise in Italy, but the record does not indicate the current capacity of these firms.57 During each year of the period of original investigation, Italian capacity was *** pounds.58 Italian producer Coprosider, S.p.A., the only firm to respond to the Commission’s questionnaire, reported it accounted for *** percent of total Italian SSBW pipe fittings production in 1999 and that its capacity utilization was consistently above *** percent.59 No Italian producer provided data in either the first five-year reviews or second five-year reviews.60 According to Global Trade Atlas, Italian exports of SSBW pipe fittings were 13.6 million pounds in 2011 and 20.1 million pounds in 2016, making Italy the world’s second largest exporter of such products in both years.61 In light of the foregoing, we do not find that subject imports from Italy would likely have no discernible adverse impact on the domestic industry if the antidumping duty order were revoked.

Malaysia. Subject imports from Malaysia have maintained a presence in the U.S. market from the original investigations up to the current period of review. In the original investigations, the volume of subject imports from Malaysia declined from *** pounds in 1997 to *** pounds in 1998, and then increased to *** pounds in 1999.62 Market penetration of SSBW pipe fittings from Malaysia was *** percent in 1997, *** percent in 1998, and *** percent in 1999.63

52 Confidential Staff Report Second Reviews (“Second Reviews CR”) INV-KK-059 at Table I-8 (EDIS Doc. 618845) (May 24, 2012).

53 Second Reviews CR at Table I-8. 54 Second Reviews CR at Table I-10. 55 CR/PR at Table I-4. 56 CR/PR at Table I-6. 57

Response at 5. 58 Original Investigations CR at Table VII-2. 59 Original Investigations CR at VII-3. 60 First Reviews CR at II-3; See Second Reviews CR at I-28-29. 61 CR/PR at Table I-7. Global Trade Atlas data concern a product category broader than the

subject merchandise. 62 Original Investigations CR at Table IV-5. 63 Original Investigations CR at Table IV-6.

12

The volume of subject imports from Malaysia was 1.5 million pounds in 2000, 781,000 pounds in 2001, 751,000 pounds in 2002, 657,000 pounds in 2003, 1.0 million pounds in 2004, and 1.5 million pounds in 2005.64 The market share of subject imports from Malaysia followed a similar trend starting at *** percent in 2000, declining to a period low of 5.3 percent in 2003, before increasing to a period high of 8.4 percent in 2005.65

During the second period of review, imports of subject merchandise from Malaysia ranged from a period high of 1.5 million pounds in 2007 to a period low of 822,000 pounds in 2009.66 Subject imports from Malaysia were 1.1 million pounds in 2010.67 In 2010, the only year for which market share data were available, subject imports from Malaysia had a *** percent share of the quantity of apparent U.S. consumption.68

During the current period of review, subject import volume from Malaysia ranged from 1.4 million pounds in 2011 to 4.1 million pounds in 2014.69 In 2016, subject import volume from Malaysia was 3.6 million pounds and the market penetration of these imports was *** percent.70

The domestic producers identified seven current producers or exporters of subject merchandise in Malaysia, but the record does not indicate the current capacity of these firms.71 During the original investigations, Malaysian capacity fluctuated between a low of *** pounds in 1997 and a high of *** pounds in 1999.72 During the first five-year reviews, Malaysian producers reported capacity utilization rates for SSBW pipe fittings ranging from a low of *** percent in 2000, to a high of *** percent in 2005.73 According to Global Trade Atlas, exports of SSBW pipe fittings from Malaysia were 10.7 million pounds in 2011 and 12.2 million pounds in 2016, and Malaysia was one of the world’s top six leading exporters of such products in every year between 2011 and 2016.74 The United States was Malaysia’s leading export market for SSBW pipe fittings in 2016.75 In light of the foregoing, we do not find that subject imports from Malaysia would likely have no discernible adverse impact on the domestic industry if the antidumping duty order were revoked.

The Philippines. Subject imports from the Philippines have maintained a presence in the U.S. market from the original investigations up to the current period of review. In the original

64 First Reviews CR at Table IV-1. 65 First Reviews CR at Table I-1. 66 Second Reviews CR at Table I-8. 67 Second Reviews CR at Table I-8. 68 Second Reviews CR at Table I-10. 69

CR/PR at Table I-4. 70 CR/PR at Tables I-4 and I-6. 71 Response at Ex. 4. 72 Original Investigations CR at Table VII-3. 73 First Reviews CR at II-3. 74 CR/PR at Table I-8. Global Trade Atlas data concern a product category broader than the

subject merchandise. 75 CR/PR at Table I-8.

13

investigations, the volume of subject imports from the Philippines increased from *** pounds in 1997 to *** pounds in 1998, and then declined to *** pounds in 1999.76 Market penetration of SSBW pipe fittings from the Philippines was *** percent in 1997, *** percent in 1998, and *** percent in 1999.77

After the imposition of the order, the volume of subject imports from the Philippines was 197,000 pounds in 2001.78 Subject imports from the Philippines then declined to 187,000 pounds in 2002, 59,000 pounds in 2003, and 25,000 pounds in 2004 before increasing to 357,000 pounds in 2005.79 The market share of subject imports from the Philippines declined from *** percent in 2000 to a period low of 0.2 percent in 2004, before increasing to 2.1 percent in 2005.80

During the second period of review, imports of subject merchandise from the Philippines ranged from a period low of 1.0 million pounds in 2006 to a period high of 2.3 million pounds in 2008.81 Subject imports from the Philippines were 2.2 million pounds in 2010.82 In 2010, the only year for which market share data were available, subject imports from the Philippines had a *** percent share of the quantity of apparent U.S. consumption.83

During the current period of review, subject import volume from the Philippines ranged from 1.4 million pounds in 2016 to 3.0 million pounds in 2011.84 In 2016, the market penetration of subject imports from the Philippines was *** percent.85

The domestic producers identified four current producers or exporters of subject merchandise in the Philippines, but the record does not contain current capacity data for these firms.86 During the original investigations, capacity in the Philippines fluctuated between a low of *** pounds in 1997 and a high of *** pounds in 1999.87 During the first five-year reviews, producers from the Philippines reported capacity utilization rates for SSBW pipe fittings ranging from a low of *** percent in 2003 to a high of *** percent in 2000.88 According to Global Trade Atlas, exports of SSBW pipe fittings from the Philippines were 7.9 million pounds in 2011 and 4.4 million pounds in 2016.89 The United States was the Philippines’ leading export market for

76 Original Investigations CR at Table IV-6.

77 Original Investigations CR at Table IV-1.

78 First Reviews CR at Table IV-1. 79 First Reviews CR at Table IV-1. 80 First Reviews CR at Table I-9. 81 Second Reviews CR at Table I-8. 82 Second Reviews CR at Table I-8. 83

Second Reviews CR at Table I-10. 84 CR/PR at Table I-4. 85 CR/PR at Table I-6. 86 Response at Ex. 4. 87 Original Investigations CR at Table VII-4. 88 First Reviews CR at II-3. 89 CR/PR at Table I-9. Global Trade Atlas data concern a product category broader than the

subject merchandise.

14

SSBW pipe fittings in every year from 2011 through 2015 and was its second largest market in 2016.90 In light of the foregoing, we do not find that subject imports from the Philippines would likely have no discernible adverse impact on the domestic industry if the antidumping duty order were revoked.

2. Likelihood of a Reasonable Overlap of Competition

The Commission generally has considered four factors intended to provide a framework for determining whether subject imports compete with each other and with the domestic like product.91 Only a “reasonable overlap” of competition is required.92 In five-year reviews, the relevant inquiry is whether there likely would be competition even if none currently exists because the subject imports are absent from the U.S. market.93

In these third five-year reviews, much of the available information concerning the likely reasonable overlap of competition is derived from the Commission’s original investigations and the full first five-year reviews.94 In the expedited second five-year reviews, as in these reviews, there was only limited information concerning the reasonable overlap factors in the record.95

Fungibility. In the original investigations and first five-year reviews, importers and domestic producers indicated that subject imports from Italy, Malaysia, and the Philippines were always or frequently used interchangeably with the domestic like product.96 The

90 CR/PR at Table I-9.

91 The four factors generally considered by the Commission in assessing whether imports compete with each other and with the domestic like product are as follows: (1) the degree of fungibility between subject imports from different countries and between subject imports and the domestic like product, including consideration of specific customer requirements and other quality-related questions; (2) the presence of sales or offers to sell in the same geographical markets of imports from different countries and the domestic like product; (3) the existence of common or similar channels of distribution for subject imports from different countries and the domestic like product; and (4) whether subject imports are simultaneously present in the market with one another and the domestic like product. See, e.g., Wieland Werke, AG v. United States, 718 F. Supp. 50 (Ct. Int’l Trade 1989).

92 See Mukand Ltd. v. United States, 937 F. Supp. 910, 916 (Ct. Int’l Trade 1996); Wieland Werke, 718 F. Supp. at 52 (“Completely overlapping markets are not required.”); United States Steel Group v. United States, 873 F. Supp. 673, 685 (Ct. Int’l Trade 1994), aff’d, 96 F.3d 1352 (Fed. Cir. 1996). We note, however, that there have been investigations where the Commission has found an insufficient overlap in competition and has declined to cumulate subject imports. See, e.g., Live Cattle from Canada and Mexico, Inv. Nos. 701-TA-386 and 731-TA-812-13 (Preliminary), USITC Pub. 3155 at 15 (Feb. 1999), aff’d sub nom, Ranchers-Cattlemen Action Legal Foundation v. United States, 74 F. Supp. 2d 1353 (Ct. Int’l Trade 1999); Static Random Access Memory Semiconductors from the Republic of Korea and Taiwan, Inv. Nos. 731-TA-761-62 (Final), USITC Pub. 3098 at 13-15 (Apr. 1998).

93 See generally, Chefline Corp. v. United States, 219 F. Supp. 2d 1313, 1314 (Ct. Int’l Trade 2002).

94 Original Determinations, USITC Pub. 3387 at 7-9; First Reviews, USITC Pub. 3889 at 8-9. 95 Second Reviews, USITC Pub. 4337 at 10-12. 96 Original Determinations, USITC Pub. 3387 at 7; First Reviews, USITC Pub. 3889 at 9.

15

Commission also found that SSBW pipe fittings from subject and domestic sources could be used interchangeably if of the same quality and the record reflected that there was generally no quality difference between subject imports and the domestic like product.97 There was no information in the second five-year reviews that the fungibility of subject imports from Italy, Malaysia, and the Philippines with each other and the domestic like product had changed.98 Similarly, the record of the current review contains no information to call into question the Commission’s prior findings of fungibility.

Channels of Distribution. In the original investigations and first five-year reviews, domestically produced SSBW pipe fittings and subject imports from the three countries were generally sold to distributors.99 Nothing in the record of the second five-year reviews indicated there was a change in the channels of distribution.100 Similarly, there is no new information in these current reviews to indicate a change in current or likely channels of distribution.101

Geographic Overlap. In the original investigations and the first five-year reviews, the Commission found that both the domestic like product and subject imports from each of the three countries were distributed nationally.102 Nothing in the record of the second five-year reviews indicated there was a change in geographic overlap.103 The record in these reviews indicates that Houston-Galveston, Texas was the single largest U.S. customs district for imports of SSBW pipe fittings for each subject country during the period of review; this is a region with a large concentration of oil and gas refining, a major application for SSBW pipe fittings.104

Simultaneous Presence in Market. In the original investigations, first five-year reviews and second five-year reviews, the domestic like product and subject imports from each of the three countries were present throughout the periods examined.105 In these current five-year reviews, the domestic like product and subject imports from Italy, Malaysia, and the Philippines were generally present in the U.S. market throughout the period of review.106

Conclusion. The record of these expedited reviews contains no new information suggesting that the reasonable overlap of competition found in the original investigations and prior reviews would not exist upon revocation. In light of this, and the absence of any contrary arguments, we find a likely reasonable overlap of competition between subject imports from

97 USITC Pub. 3387 at 7-9. 98 Second Reviews, USITC Pub. 4337 at 11; CR at I-28-29; PR at I-21. 99 Original Determinations, USITC Pub. 3387 at 9; First Reviews, USITC Pub. 3889 at 9. 100 Second Reviews, USITC Pub. 4337. 101

CR at I-28-29; PR at I-21. 102 Original Determinations, USITC Pub. 3387 at 8-9; First Reviews, USITC Pub. 3889 at 9. 103 Second Reviews, USITC Pub. 4337. 104 See CR at I-28-29; PR at I-21. 105 Original Determinations, USITC Pub. 3387 at 8; First Reviews, USITC Pub. 3889 at 9; Second

Reviews, USITC Pub. 4337 at 11. 106 See CR at I-28-29; PR at I-21.

16

Italy, Malaysia, and the Philippines and between imports from each subject country and the domestic like product.

3. Likely Conditions of Competition

In determining whether to exercise our discretion to cumulate subject imports from Italy, Malaysia, and the Philippines, we assess whether imports of subject merchandise from the subject countries would compete under similar or different conditions in the U.S. market if the orders under review were revoked. There is no indication of significant differences in the likely conditions of competition with respect to subject imports from Italy, Malaysia, and the Philippines in the U.S. market. Accordingly, we exercise our discretion to cumulate subject imports from Italy, Malaysia, and the Philippines in these reviews.

IV. Revocation of the Antidumping Duty Orders Would Likely Lead to Continuation or Recurrence of Material Injury Within a Reasonably Foreseeable Time

A. Legal Standards

In a five-year review conducted under section 751(c) of the Tariff Act, Commerce will revoke an antidumping or countervailing duty order unless: (1) it makes a determination that dumping or subsidization is likely to continue or recur and (2) the Commission makes a determination that revocation of the antidumping or countervailing duty order “would be likely to lead to continuation or recurrence of material injury within a reasonably foreseeable time.”107 The SAA states that “under the likelihood standard, the Commission will engage in a counterfactual analysis; it must decide the likely impact in the reasonably foreseeable future of an important change in the status quo – the revocation or termination of a proceeding and the elimination of its restraining effects on volumes and prices of imports.”108 Thus, the likelihood standard is prospective in nature.109 The U.S. Court of International Trade has found that

107 19 U.S.C. § 1675a(a). 108 SAA, H.R. Rep. 103-316. vol. I, at 883-84 (1994). The SAA states that “{t}he likelihood of injury

standard applies regardless of the nature of the Commission’s original determination (material injury, threat of material injury, or material retardation of an industry). Likewise, the standard applies to suspended determinations that were never completed.” Id. at 883.

109 While the SAA states that “a separate determination regarding current material injury is not necessary,” it indicates that “the Commission may consider relevant factors such as current and likely continued depressed shipment levels and current and likely continued {sic} prices for the domestic like product in the U.S. market in making its determination of the likelihood of continuation or recurrence of material injury if the order is revoked.” SAA at 884.

17

“likely,” as used in the five-year review provisions of the Act, means “probable,” and the Commission applies that standard in five-year reviews.110

The statute states that “the Commission shall consider that the effects of revocation or termination may not be imminent, but may manifest themselves only over a longer period of time.”111 According to the SAA, a “‘reasonably foreseeable time’ will vary from case-to-case, but normally will exceed the ‘imminent’ timeframe applicable in a threat of injury analysis in original determinations.”112

Although the standard in a five-year review is not the same as the standard applied in an original investigation, it contains some of the same fundamental elements. The statute provides that the Commission is to “consider the likely volume, price effect, and impact of imports of the subject merchandise on the industry if the orders are revoked or the suspended investigation is terminated.”113 It directs the Commission to take into account its prior injury determination, whether any improvement in the state of the industry is related to the order or the suspension agreement under review, whether the industry is vulnerable to material injury if an order is revoked or a suspension agreement is terminated, and any findings by Commerce regarding duty absorption pursuant to 19 U.S.C. § 1675(a)(4).114 The statute further provides that the presence or absence of any factor that the Commission is required to consider shall not necessarily give decisive guidance with respect to the Commission’s determination.115

In evaluating the likely volume of imports of subject merchandise if an order under review is revoked and/or a suspended investigation is terminated, the Commission is directed to consider whether the likely volume of imports would be significant either in absolute terms

110 See NMB Singapore Ltd. v. United States, 288 F. Supp. 2d 1306, 1352 (Ct. Int’l Trade 2003) (“‘likely’ means probable within the context of 19 U.S.C. § 1675(c) and 19 U.S.C. § 1675a(a)”), aff’d mem., 140 Fed. Appx. 268 (Fed. Cir. 2005); Nippon Steel Corp. v. United States, 26 CIT 1416, 1419 (2002) (same); Usinor Industeel, S.A. v. United States, 26 CIT 1402, 1404 nn.3, 6 (2002) (“more likely than not” standard is “consistent with the court’s opinion;” “the court has not interpreted ‘likely’ to imply any particular degree of ‘certainty’”); Indorama Chemicals (Thailand) Ltd. v. United States, 26 CIT 1059, 1070 (2002) (“standard is based on a likelihood of continuation or recurrence of injury, not a certainty”); Usinor v. United States, 26 CIT 767, 794 (2002) (“‘likely’ is tantamount to ‘probable,’ not merely ‘possible’”).

111 19 U.S.C. § 1675a(a)(5). 112 SAA at 887. Among the factors that the Commission should consider in this regard are “the

fungibility or differentiation within the product in question, the level of substitutability between the imported and domestic products, the channels of distribution used, the methods of contracting (such as spot sales or long-term contracts), and lead times for delivery of goods, as well as other factors that may only manifest themselves in the longer term, such as planned investment and the shifting of production facilities.” Id.

113 19 U.S.C. § 1675a(a)(1). 114 19 U.S.C. § 1675a(a)(1). Commerce has not made any duty absorption findings concerning the

orders under review, because it has not completed an administrative review of the orders. See CR at I-16, PR at I-11.

115 19 U.S.C. § 1675a(a)(5). Although the Commission must consider all factors, no one factor is necessarily dispositive. SAA at 886.

18

or relative to production or consumption in the United States.116 In doing so, the Commission must consider “all relevant economic factors,” including four enumerated factors: (1) any likely increase in production capacity or existing unused production capacity in the exporting country; (2) existing inventories of the subject merchandise, or likely increases in inventories; (3) the existence of barriers to the importation of the subject merchandise into countries other than the United States; and (4) the potential for product shifting if production facilities in the foreign country, which can be used to produce the subject merchandise, are currently being used to produce other products.117

In evaluating the likely price effects of subject imports if an order under review is revoked and/or a suspended investigation is terminated, the Commission is directed to consider whether there is likely to be significant underselling by the subject imports as compared to the domestic like product and whether the subject imports are likely to enter the United States at prices that otherwise would have a significant depressing or suppressing effect on the price of the domestic like product.118

In evaluating the likely impact of imports of subject merchandise if an order under review is revoked and/or a suspended investigation is terminated, the Commission is directed to consider all relevant economic factors that are likely to have a bearing on the state of the industry in the United States, including but not limited to the following: (1) likely declines in output, sales, market share, profits, productivity, return on investments, and utilization of capacity; (2) likely negative effects on cash flow, inventories, employment, wages, growth, ability to raise capital, and investment; and (3) likely negative effects on the existing development and production efforts of the industry, including efforts to develop a derivative or more advanced version of the domestic like product.119 All relevant economic factors are to be considered within the context of the business cycle and the conditions of competition that are distinctive to the industry. As instructed by the statute, we have considered the extent to which any improvement in the state of the domestic industry is related to the orders under review and whether the industry is vulnerable to material injury upon revocation.120

No respondent interested party participated in these reviews. The record, therefore, contains limited new information with respect to the current condition of the SSBW pipe fittings industries in Italy, Malaysia, and the Philippines. Accordingly, for our determination, we

116 19 U.S.C. § 1675a(a)(2). 117 19 U.S.C. § 1675a(a)(2)(A-D). 118 See 19 U.S.C. § 1675a(a)(3). The SAA states that “{c}onsistent with its practice in

determinations, in considering the likely price effects of imports in the event of revocation and termination, the Commission may rely on circumstantial, as well as direct, evidence of the adverse effects of unfairly traded imports on domestic prices.” SAA at 886.

119 19 U.S.C. § 1675a(a)(4). 120 The SAA states that in assessing whether the domestic industry is vulnerable to injury if the

order is revoked, the Commission “considers, in addition to imports, other factors that may be contributing to overall injury. While these factors, in some cases, may account for the injury to the domestic industry, they may also demonstrate that an industry is facing difficulties from a variety of sources and is vulnerable to dumped or subsidized imports.” SAA at 885.

19

rely as appropriate on the facts available from the original investigations and the limited new information on the record in these third five-year reviews.

B. Conditions of Competition and the Business Cycle

In evaluating the likely impact of the subject imports on the domestic industry if an order is revoked, the statute directs the Commission to consider all relevant economic factors “within the context of the business cycle and conditions of competition that are distinctive to the affected industry.”121 The following conditions of competition inform our determination.

1. Demand Conditions

In the prior proceedings, the Commission found that SSBW pipe fittings were used in industrial piping systems to join pipes in straight lines or to change the direction and flow of fluids, where their ability to withstand corrosion and oxidation, as well as extreme temperature and pressure, is important. In the first five-year reviews, the Commission explained further that demand for SSBW pipe fittings was derived from demand in major end use markets, including the petrochemical, nuclear, food processing, textile, and semiconductor industries, as well as breweries and paper mills.122 During the second five-year reviews, the Commission identified the oil and gas industry as a primary driver of demand, and observed that fluctuating oil prices and adjustments in refinery capacity and maintenance caused fluctuations in demand in the United States.123 The record indicates that the principal uses and markets for SSBW pipe fittings have not changed since the prior proceedings.124

During the original period of investigation, the apparent U.S. consumption of SSBW pipe fittings fluctuated, increasing overall from *** pounds in 1997 to *** pounds in 1999, and was *** pounds in interim 2000 compared to *** pounds in interim 1999.125 During the first five-year reviews, apparent U.S. consumption by quantity was *** pounds in 2000, 12.4 million pounds in 2001, 14.1 million pounds in 2002, 12.4 million pounds in 2003, 15.2 million pounds in 2004, and 17.3 million pounds in 2005.126 During the second five-year reviews, apparent U.S. consumption by quantity increased from 17.3 million pounds in 2005 to *** pounds in 2010.127 During the current period of review, apparent U.S. consumption was *** pounds in 2016, higher than in 2005 or 2010.128

121 19 U.S.C. § 1675a(a)(4). 122 Original Determinations, USITC Pub. 3387 at 9; First Reviews, USITC Pub. 3889 at 12-13. 123

Second Reviews, USITC Pub. 4337 at 14. 124 CR at I-13, PR at I-10. 125 Original Determinations, USITC Pub. 3387 at 9. 126 First Reviews, USITC Pub. 3889 at 13; First Reviews Confidential Opinion (EDIS Doc. 619063)

at 15. 127 Second Reviews, USITC Pub. 4337 at 14; Second Reviews Confidential Opinion (EDIS Doc.

619083) at 17. 128 CR/PR at Table I-6.

20

2. Supply Conditions

In the original investigations, the Commission found the domestic market was supplied by twelve domestic producers, imports from subject countries, and nonsubject imports. The market share of cumulated subject imports increased. The quantity of nonsubject imports declined and their share of apparent U.S. consumption by quantity fell from *** percent in 1997 to *** percent in 1999.129 In the first and second five-year reviews, the U.S. market continued to be supplied by domestic producers,130 imports from subject countries, and nonsubject imports. During the first five-year reviews, the domestic industry’s market share declined from *** percent in 2000 to 25.7 percent in 2005, subject import market share declined from *** percent in 2000 to 11.6 percent in 2005, and nonsubject import market share increased from *** percent in 2000 to 62.7 percent in 2005.131 During the second five-year reviews, the domestic industry had increased its share of U.S. consumption by quantity since the first reviews. In 2010, its share was *** percent, that of cumulated subject imports was *** percent, and that of nonsubject imports was *** percent.132

In 2016, the domestic industry was the smallest source of supply in the U.S. market. Its market share was *** percent. Cumulated subject imports were the second largest source of supply, with a *** percent market share. Nonsubject imports were the largest source of supply, with a *** percent share.133 Principal sources of nonsubject imports during the current period of review included Korea, China, Taiwan, and Canada.134

3. Substitutability and Other Conditions

In the original investigations, the Commission observed that available data suggested that subject imports from Italy, Malaysia, and the Philippines were at least moderately fungible with one another and with the domestic like product. Specifically, products from domestic and all subject sources were produced to ASTM, ASME, and ANSI standards that specified standard diameters (based on nominal pipe sizes) and standard wall thickness to ensure compatibility with pipes in flow systems. Further, domestic producers and importers reported that subject

129 Original Determinations, USITC Pub. 3387 at 10-11; Original Investigations CR (EDIS Doc. 617162) at Table C-1.

130 Domestic industry capacity declined from *** million pounds in 2000 to 7.0 million pounds in 2005, as the American Fittings plant closed in 2004. First Reviews, USITC Pub. 3889 at 13; First Reviews Confidential Opinion (EDIS Doc. 619063) at 15-16. During the second five-year reviews, the number of domestic producers fell from 12 to eight. Second Reviews, USITC Pub. 4337 at 15.

131 First Reviews, USITC Pub. 3889 at 13; First Reviews Confidential Opinion (EDIS Doc. 619063) at 18.

132 Second Reviews, USITC Pub. 4337 at 18; Second Reviews Confidential Opinion (EDIS Doc. 619083) at 18.

133 CR/PR at Table I-6. 134 CR/PR at Table I-5. Response at 17.

21

imports from the three countries were always or frequently interchangeable with each other and with the domestic like product and the record demonstrated that subject imports from the three countries and the domestic like product were all sold in both the approved manufacturers list (“AML”) and the non-AML markets for overlapping end uses.135

In the first five-year reviews, the Commission continued to find that subject imports from each country were moderately fungible with each other and with the domestic like product. The Commission observed that shipments of subject imports from each country and the domestic like product overlapped to a significant extent during the period of review in terms of input material, size, and end use. Further, a majority of producers, importers, and purchasers reported that subject imports from each country and the domestic like product were either always or frequently interchangeable.136

In the second five-year reviews, the Commission found that there was no new information contradicting the substitutability finding from the first reviews. Accordingly, the Commission found that there was a moderate degree of fungibility among subject imports from each subject country and between cumulated subject imports and the domestic like product.137

As discussed above, the record in these reviews contains no information that the findings on substitutability from the prior proceedings are no longer applicable. Thus we continue to find that subject imports from Italy, Malaysia, and the Philippines are moderately fungible with the domestic like product, and that price is an important factor in purchasing decisions.

C. Likely Volume of Subject Imports

1. The Original Investigations and Prior Reviews

In the original investigations, the Commission found a significant increase in cumulated subject import volume. Cumulated subject import volume increased from *** pounds in 1997 to *** pounds in 1999, and was *** pounds in interim 1999 compared with *** pounds in interim 2000. The U.S. market share of cumulated subject imports increased from *** percent in 1997 to *** percent in 1999, and was *** percent in interim 1999 and *** percent in interim 2000.138 In the first five-year reviews, the Commission found that although cumulated subject import volume and market share both declined from 2000 to 2003, they increased in 2004 and 2005. Each subject country possessed significant excess capacity and also held significant inventories of subject merchandise. With respect to the Italian industry, the Commission found that although exports of subject merchandise from Italy peaked in 2001 and declined through

135 Original Determinations, USITC Pub. 3387 at 7-10. 136 First Reviews, USITC Pub. 3889 at 13-14. 137 Second Reviews, USITC Pub. 4337 at 15. 138 Original Determinations, USITC Pub. 3387 at 11, 14-15; Original Determinations Confidential

Opinion (EDIS Doc. 619045) at 15.

22

the end of the period of review, and that one Italian exporter reportedly went out of business, there was no evidence that such declines indicated that the Italian industry had decreased its production capacity. With respect to Malaysia, the Commission found that the two responding producers’ combined excess capacity and inventories would have equaled *** percent of apparent U.S. consumption by quantity in 2005.139 The Commission further found that the Philippine industry *** its capacity during the period of review, and its combined excess capacity and end-of-period inventories were equal to *** percent of apparent U.S. consumption by quantity in 2005. In addition, each subject industry was highly export oriented. Based on these findings, the Commission found that the volume of cumulated subject imports would likely be significant absent the antidumping duty orders.140 In the second five-year reviews, cumulated subject import volume increased overall and remained at a significant level throughout the period of review. Cumulated subject imports increased from 2.2 million pounds in 2006 to 3.7 million pounds in 2007, increased again to 4.0 million pounds in 2008, declined to 3.2 million pounds in 2009, and then increased to 3.4 million pounds in 2010, a level 68.3 percent higher than the 2005 level. Cumulated subject imports accounted for *** percent of apparent U.S. consumption by quantity in 2010, compared with 11.6 percent in 2005.141 Further, the information in the record indicated that the subject industries in Italy, Malaysia, and the Philippines had significant capacity, were significantly export oriented, and demonstrated the ability to increase exports rapidly. Based on these findings, the Commission found that the volume of cumulated subject imports, both in absolute terms and relative to production and consumption in the United States, would likely be significant and increase significantly absent the antidumping duty orders.142

2. The Current Reviews

Cumulated subject import volume maintained a substantial presence in the U.S. market and increased overall during the period of review. Cumulated subject imports increased from 4.5 million pounds in 2011 to 4.9 million pounds in 2012, 5.7 million pounds in 2013, and 7.3 million pounds in 2014, before declining to 5.9 million pounds in 2015 and 5.1 million pounds in 2016.143 Cumulated subject imports accounted for *** percent of apparent U.S. consumption by quantity in 2016, compared with *** percent in 2010.144

139 First Reviews, USITC Pub. 3889 at 16; First Reviews Confidential Opinion (EDIS Doc. 619063) at 20.

140 First Reviews, USITC Pub. 3889 at 18-21; First Reviews Confidential Opinion (EDIS Doc. 619063) at 21.

141 Second Reviews, USITC Pub. 4337 at 16; Second Reviews Confidential Opinion (EDIS Doc. 619083) at 21.

142 Second Reviews, USITC Pub. 4337 at 16-18. 143 CR/PR at Table I-4. 144 CR/PR at Table I-6.

23

The continuous presence of substantial quantities of cumulated subject imports during the period of review indicates that subject producers remain interested in supplying the U.S. market. Other information available in the record indicates that cumulated subject imports will increase if the orders were revoked. The limited information in the record indicates that the subject producers in Italy, Malaysia, and the Philippines have significant capacity, are significantly export oriented, and have a demonstrated ability to increase exports rapidly.

Italy was the second largest world exporter of SSBW pipe fittings throughout most of the period of review.145 Italian exports of SSBW pipe fittings reached a peak of 21.9 million pounds in 2013, and declined to 20.1 million pounds in 2016.146 Because there is nothing in the record indicating that this decrease in exports was accompanied by increased sales to the domestic Italian market or a decrease in production capacity, these data suggest that subject producers in Italy have the ability to increase exports upon revocation of the order.147 The industry in Italy increased its exports of SSBW pipe fittings from 13.6 million in 2011 to 21.9 million in 2013, indicating an ability to increase exports rapidly.148

The industry in Malaysia is export oriented and has the ability to increase exports rapidly. Malaysian exports of SSBW pipe fittings were at a period low of 5.9 million in 2012, but increased by more than double to 12.2 million pounds in 2016, when Malaysia was the fourth-largest world exporter of SSBW pipe fittings.149 Available data indicate that capacity in Malaysia has increased since the original investigations because Superinox and Pantech, which did not exist at the time of the original investigation, have since become two of the largest suppliers of SSBW pipe fittings to the U.S. market.150

The industry in the Philippines was also among the top ten global exporters of SSBW pipe fittings during the period of review.151 Exports of SSBW pipe fittings from the Philippines were at a period high of 10.1 million pounds in 2012, and declined to 4.4 million pounds in 2016.152 Because there is nothing in the record indicating that this decrease in exports was accompanied by increased sales to the domestic market or a decrease in production capacity, these data suggest that subject producers in the Philippines have the ability to increase exports upon revocation of the order.153

In light of their current interest and participation in the U.S. market, export orientation, and available capacity, the industries in Italy, Malaysia, and the Philippines will likely increase

145 CR/PR at Table I-10. 146 CR/PR at Table I-7. 147 To the contrary, the information available indicates that several producers in Italy have

publicly announced investments in production facilities and expanded capacity. Response at 5-6. 148 CR/PR at Table I-7. 149 CR/PR at Table I-8. 150 Response at 8 and ex. T. 151 CR/PR at Table I-10. 152 CR/PR at Table I-9. 153 To the contrary, the information available indicates that there is an additional exporter of

SSBW pipe fittings in the Philippines that was not identified in the prior reviews. Response at 9.

24

exports to the U.S. market upon revocation. For the foregoing reasons, we find that cumulated subject import volume would likely be significant in absolute terms and relative to consumption upon revocation of the antidumping duty orders. 154

D. Likely Price Effects


In the original investigations, the Commission found that the subject imports consistently undersold the domestic like product by significant margins. It further found that subject imports depressed and suppressed prices for the domestic like product to a significant degree.155

In the first five-year reviews, the Commission found that the domestic like product and subject imports were moderately fungible and that price was an important factor in purchasing decisions. Cumulated subject imports undersold the domestic like product in 66 of 74 pricing product comparisons at margins ranging up to 80.5 percent. The Commission found that the presence of nonsubject imports in the U.S. market was unlikely to limit the ability of subject imports to increase because the average unit values of the nonsubject imports were higher than those of the subject imports. Finally, the Commission determined that subject imports were likely to depress or suppress the prices of the domestic like product if the antidumping duty orders were revoked.156

In the second five-year reviews, there was no new product-specific pricing information on the record. Consequently, the Commission adopted its findings from the first five-year reviews that the domestic like product and subject imports were moderately fungible and that price was an important factor in purchasing decisions. It found that if the orders were revoked, subject producers would resume their pattern of underselling as a means of increasing their market share. To respond, domestic producers would have to either reduce their prices or relinquish market share. The Commission consequently concluded that the likely significant increase in subject import volume at prices that would likely undersell the domestic like product to a significant degree would likely have significant price effects on the domestic industry.157


There is no new product-specific pricing information on the record in these reviews. In the absence of any new information to the contrary, we adopt our findings from the prior

154 Because of the expedited nature of these reviews, the record does not contain information about inventories of the subject merchandise or the potential for product shifting. Imports of SSBW pipe fittings from Italy, Malaysia, and the Philippines are not subject to antidumping or countervailing duty orders in any other country. CR at I-38, PR at I-27.

155 Original Determinations, USITC Pub. 3387 at 11-12. 156 First Reviews, USITC Pub. 3889 at 22-23. 157 Second Reviews, USITC Pub. 4337 at 18-19.

25

proceedings that the domestic like product and the subject imports are moderately fungible and that price is an important factor in purchasing decisions. Based on the available information, we find that if the orders were revoked, the increased and significant volumes of cumulated subject imports likely upon revocation would likely significantly undersell the domestic like product to gain market share, as they did in the original investigations. The volume of low-priced subject imports that would likely enter the U.S. market in the event of revocation would force the domestic industry to cut prices, forego price increases, or risk losing market share. In light of these considerations, we conclude that absent the restraining effect of the orders, subject imports from Italy, Malaysia, and the Philippines would likely cause the domestic industry to lose market share and/or significantly depress or suppress prices for the domestic like product, thereby causing significant price effects.

E. Likely Impact of Subject Imports


In the original investigations, the Commission found that the significant increase in the volume of subject imports, coupled with their price depressing and suppressing effects, had adversely affected the domestic industry. Over the period examined, the domestic industry’s capacity utilization, sales value, employment levels, and operating income declined, and inventories increased. The Commission observed that the modest improvement in some domestic industry indicators between the interim periods occurred as other indicators declined. In particular, it cited continued declines in employment levels and evidence that recent price increases, resulting from a temporary boost in demand, were beginning to soften.158

In the first five-year reviews, the Commission found that the domestic industry’s operating and financial performance, production, employment, U.S. shipments and value of such shipments, operating profit margins, and return on investment declined from 2000 to 2003 but recovered in 2004 and 2005. The Commission further found only modest declines in the domestic industry’s capacity and market share during the period of review, observing that the domestic industry’s capital expenditures and research and development expenses declined over the period reviewed, and that productivity increased during the period. Given the domestic industry’s recovery toward the end of the period, the Commission found that the domestic industry was not vulnerable to the continuation or recurrence of material injury. Nevertheless, because of the likely significant increase in the volume of subject imports and their likely adverse price effects, the Commission concluded that subject imports would likely have a significant impact on the domestic industry if the antidumping duty orders were revoked.159

In the second five-year reviews, the Commission found that the domestic industry’s capacity and output were higher in 2010 than in 1999 or 2005; however, its capacity utilization in

158 Original Determinations, USITC Pub. 3387 at 13-14. 159 First Reviews, USITC Pub. 3889 at 25-27.

26

2010 was lower and its ratio of cost of goods sold to sales was higher.160 Given the expedited nature of the reviews, the Commission found the information available insufficient to make a finding on whether the domestic industry was vulnerable to the continuation or recurrence of material injury in the event of revocation of the orders. Nevertheless, because of the likely significant increase in the volume of subject imports and their likely adverse price effects, the Commission concluded that subject imports would likely have a significant impact on the domestic industry if the antidumping orders were revoked.161 The Commission acknowledged that while subject imports would displace nonsubject imports to some extent upon revocation, a significant portion of the expected increase in subject imports would be at the expense of the domestic industry, particularly given the general substitutability of SSBW pipe fittings from different sources and the likelihood of subject import underselling and adverse price effects.162


Because of the expedited nature of these reviews, information on the record concerning the recent performance of the domestic industry is limited. This limited information is insufficient for us to make a finding on whether the domestic industry is vulnerable to the continuation of recurrence of material injury in the event of the revocation of the orders.

In 2016, the domestic industry’s capacity, production, and capacity utilization and U.S. shipments were lower than in either prior review or in 1999, the final full year of the original period of investigation.163 By contrast, the industry’s operating income and operating income margin were higher than in either prior review or in 1999.164

As discussed above, we conclude that revocation of the antidumping orders on SSBW pipe fittings from Italy, Malaysia, and the Philippines would likely lead to a significant volume of subject imports that would likely undersell the domestic like product and would likely force the domestic industry to lower prices or lose sales. We find that the likely volume and price effects of subject imports would likely have a significant impact on the production, shipments, sales, market share, and revenue of the domestic industry. These reductions would have a direct adverse impact on the domestic industry’s profitability and employment, as well as its ability to raise capital and make and maintain necessary capital investments.

We have also considered the likely role of nonsubject imports in the U.S. market. There is no indication or argument on this record that the presence of nonsubject imports would prevent subject imports from Italy, Malaysia, and the Philippines from significantly increasing

160 Second Reviews, USITC Pub. 4337 at 20; Second Reviews Confidential Opinion (EDIS Doc.

619083) at 27. 161 Second Reviews, USITC Pub. 4337 at 20. 162 Second Reviews, USITC Pub. 4337 at 20-21. 163 In 2016, capacity was *** pounds, production was *** pounds, capacity utilization was ***

percent, and U.S. commercial shipments were *** pounds. CR/PR at Table I-3. 164 Operating income was $*** in 2016; as a ratio to net sales, operating income was ***

percent in 2016. CR/PR at Table I-3.

27

their presence in the U.S. market in the event of revocation of the orders, given the export orientation of the subject industries and the relative attractiveness of the U.S. market. Given the fungibility between the subject imports and the domestic like product, the likely increase in subject imports upon revocation would likely take significant market share from the domestic industry. Therefore, the subject imports are likely to have adverse effects on the domestic industry distinct from nonsubject imports in the event of revocation.

V. Conclusion

For the foregoing reasons, we determine that revocation of the antidumping duty orders on SSBW pipe fittings from Italy, Malaysia, and the Philippines would likely lead to continuation or recurrence of material injury to an industry in the United States within a reasonably foreseeable time.

I-1

INFORMATION OBTAINED IN THESE REVIEWS

BACKGROUND

On June 1, 2017 the U.S. International Trade Commission (“Commission”) gave notice, pursuant to section 751(c) of the Tariff Act of 1930, as amended (“the Act”),1 that it had instituted reviews to determine whether revocation of antidumping orders on stainless steel butt-weld pipe fittings (“SSBW fittings”) from Italy, Malaysia, and the Philippines would likely lead to the continuation or recurrence of material injury to a domestic industry.2 All interested parties were requested to respond to this notice by submitting certain information requested by the Commission.3 4 The following tabulation presents information relating to the background and schedule of this proceeding:

Effective

or statutory date Action

June 2, 2017 Notice of initiation and institution by Commerce and Commission

September 5, 2017 Commission vote on adequacy

October 6, 2017 Commerce results of its expedited reviews

January 8, 2018 Commission deadline to complete expedited reviews

RESPONSES TO THE COMMISSION’S NOTICE OF INSTITUTION

Individual responses

The Commission received one submission in response to its notice of institution in the subject reviews. It was filed on behalf of the following entities (collectively referred to herein as “domestic interested parties”):

1 19 U.S.C. 1675(c). 2 Stainless Steel Butt-Weld Pipe Fittings from Italy, Malaysia, and the Philippines; Institution of Five-

Year Reviews, 82 FR 25324, June 1, 2017. In accordance with section 751(c) of the Act, the U.S. Department of Commerce (“Commerce”) published a notice of initiation of five-year reviews of the subject antidumping duty orders effective June 2, 2017. Initiation of Five-Year (Sunset) Reviews, 82 FR 25599, June 2, 2017. Pertinent Federal Register notices are referenced in app. A, and may be found at the Commission’s website (www.usitc.gov).

3 As part of their response to the notice of institution, interested parties were requested to provide company-specific information. That information is presented in app. B. Summary data compiled in prior proceedings is presented in app. C.

4 Interested parties were also requested to provide a list of three to five leading purchasers in the U.S. market for the subject merchandise. Presented in app. D are the responses received from purchaser surveys transmitted to the purchasers identified in the adequacy phase of these reviews.

I-2

Core Pipe Products, Inc. (formerly Gerlin, Inc.) (“Core Pipe”), domestic producer of SSBW fittings;

Shaw Alloy Piping Products, LLC (“Shaw APP”), domestic producer of SSBW fittings; and

Taylor Forge Stainless, Inc. (“Taylor Forge”), domestic producer of SSBW fittings.

A complete response to the Commission’s notice of institution requires that the responding interested party submit to the Commission all the information listed in the notice. Responding firms are given an opportunity to remedy and explain any deficiencies in their responses. A summary of the number of responses and estimates of coverage for each is shown in table I-1.

Table I-1

SSBW fittings: Summary of responses to the Commission’s notice of institution

Type of interested party

Completed responses

Number Coverage

Domestic:

U.S. producer 1 ***%1

Respondent:

U.S. importer 0 NA

Foreign producer/exporter 0 NA

Note.--The “number of responses” is the number of physical responses received by the Commission not the number of firms contained in the submissions.

1 In their response to the notice of institution, the three responding domestic producers estimated that they

account for this share of total U.S. production of SSBW fittings during 2016. Domestic interested parties based their computation on the quantity of reported production (*** pounds) divided by estimated total U.S. production (*** pounds). Domestic Interested Parties’ Response to the Notice of Institution, June 30, 2017, p. 15.

Party comments on adequacy

The Commission received one submission from parties commenting on the adequacy of responses to the notice of institution and whether the Commission should conduct expedited or full reviews. This submission was filed on behalf of Core Pipe, Shaw APP, and Taylor Forge.5

Domestic interested parties argued that the Commission should find the domestic interested parties’ group response to be adequate. They further argued that the Commission should find the respondent interested party group response to be inadequate since there was no submission by any respondent interested party. Therefore, based on the argument that the respondent interested parties’ group response is inadequate and based on the argument that there have been no major changes in the conditions of competition in the market since the Commission’s previous five-year reviews or other factors that would warrant full reviews, the

5 Domestic Interested Parties’ Comments on Adequacy, August 10, 2017, p. 1.

I-3

domestic interested parties request that the Commission conduct expedited reviews of the antidumping orders on imports of SSBW fittings from Italy, Malaysia, and the Philippines.

RECENT DEVELOPMENTS IN THE INDUSTRY

Since the Commission’s second five-year reviews, the following developments have occurred in the SSBW fittings industry.

In early 2013, Chicago Bridge & Iron Company N.V. (“CB&I”), a provider of technology and infrastructure to the energy industry, acquired the Shaw Group for $3 billion in cash and stock.6 The acquisition included Shaw APP, which is a wholly-owned subsidiary of the Shaw Group, that produces SSBW fittings in its 485,000 square foot Shreveport, Louisiana plant.7

In 2013, Jero, Inc. (Florence, Kentucky) expanded and moved to a 90,000-square-foot plant in Florence, Kentucky from a 30,000-square-foot plant in Florence.8 Jero specializes in manufacturing stainless steel (and other alloys) stub-ends.

In 2015, Shaw Stainless and A

stainless steel butt-weld pipe fittings from italy, malaysia, and the philippines ... · 2018. 1....

Documents